FEBRUARY 9, 2023

TELUS reports strong operational and financial results for fourth quarter 2022; announces 2023 consolidated financial targets

Land acknowledgement

Vancouver - Xʷməθkʷəy̓əm (Musqueam), Sḵwx̱wú7mesh (Squamish), and səlilwətaɬ (Tsleil-Waututh) Territories

  • Industry-leading total Mobile and Fixed customer growth of 301,000 up 29,000 over last year, and our strongest fourth quarter on record, driven by strong demand for our leading product portfolio of Mobility and Fixed Broadband services

  • Robust mobile phone net additions of 112,000 and record fourth quarter connected device net additions of 106,000; industry-leading postpaid churn of 0.96 per cent and Mobile Phone ARPU growth of 2.2 per cent

  • Best fixed customer growth on record with 83,000 net additions, including 42,000 internet customer additions, powered by leading customer loyalty in combination with TELUS’ expansive PureFibre network

  • Record high customer additions of 1,043,000 for the full year, driven by consistently potent operational execution, unmatched bundled product offerings across Mobile and Home, and team member culture focused on delivering exceptional customer experiences over globally-leading networks

  • Strong quarterly financial results leading to industry-leading full year Consolidated Operating Revenues, Adjusted EBITDA and Free Cash Flow growth of 8.6 per cent, 9.5 per cent and 64 per cent, respectively; Net income for the full year up 1.2 per cent

  • Global industry-best growth profile, underpinned by strong operating momentum across our telecom business, bolstered by TELUS International, TELUS Health and TELUS Agriculture & Consumer Goods

  • Targeting 2023 Operating Revenue and Adjusted EBITDA to increase by 11 to 14 per cent and 9.5 to 11 per cent, respectively

  • Robust Free Cash Flow growth of circa 57 per cent to approximately $2.0 billion in 2023 supports balance sheet strength and leading dividend growth program through 2025

Vancouver, B.C. – TELUS Corporation today released its unaudited results for the fourth quarter of 2022. Consolidated operating revenues and other income increased by 3.8 per cent over the same period a year ago to $5.1 billion, or 13 per cent excluding the $410 million pre-tax gain arising from the disposition of our financial solutions business, as reported in other income, in the fourth quarter of 2021. This growth was driven by higher service revenues in our two reportable segments: TELUS technology solutions (TTech) and Digitally-led customer experiences – TELUS International (DLCX). TTech service revenue growth was driven by increased health services revenues attributable to business acquisitions, including LifeWorks and organic growth, higher mobile network revenues, increased data service revenues and increased mobile equipment revenues. Increased DLCX revenues resulted from expanded services for existing clients and growth from new clients. See Fourth Quarter 2022 Operating Highlights within this news release for a discussion on TTech and DLCX results.

“Throughout 2022, TELUS achieved strong operational and financial results across our business, including leading our North American peer group with respect to 2022 Operating Revenues, Adjusted EBITDA and Free Cash Flow growth” said Darren Entwistle, President and CEO. “This is a trend the TELUS team has consistently demonstrated over the long-term. Our robust performance in the fourth quarter, and for the full year, reflects the chemistry of our globally leading broadband networks and customers first culture, driving our hallmark combination of profitable customer growth, alongside strong financial results. Industry-leading net additions of 301,000 represented our best fourth quarter on record, and concluded another year of industry-leading expansion of our customer base. Indeed, in 2022, we delivered an all-time record, surpassing total annual net additions of more than one million for the first time, including another best-ever year for Fixed subscriber growth of 274,000, and delivered our highest Mobile Phone net additions since 2010 with 401,000 net new customers. This industry-leading growth reflects the consistent potency of our operational execution, unmatched bundled product offerings across Mobile and Home, and team member culture focused on delivering exceptional customer experiences over our globally-leading PureFibre and 5G networks. Our team’s passion for delivering customer experience excellence, once again contributed to strong client loyalty across our key product lines, including blended Mobile Phone, PureFibre internet, Optik TV, Security and Voice churn all below one per cent for the year. Furthermore, 2022 represented our ninth consecutive year of industry-leading postpaid wireless churn below one per cent.”

“Our results are buttressed by our highly differentiated and powerful asset mix geared towards high-growth, technology-oriented verticals,” continued Darren. “Despite a challenging macroeconomic environment,
TELUS International
(TI) delivered strong results in 2022, with double-digit revenue growth, leading profitability and robust cash flow for the full year. Indeed, TI’s strong results and outlook also reflect the important relationship with TELUS as an anchor customer, enabling TELUS with superior customer service excellence and powering our digitization strategy - a unique relationship that significantly benefits both organizations. TI’s continued focus on profitable growth, powered by attractive end-to-end digital capabilities, position it as a trusted advisor for premier digital customer experiences and IT services for its over 650 global clients. Earlier in January, TI completed the acquisition of WillowTree, a full service digital product provider, bolstering TI's front-end development and design competencies, unlocking attractive cross-selling opportunities. This resulted in the addition of new marquee customers that further diversify TI's enviable list of client partners, while accelerating TELUS’ ongoing digital transformation and supporting key product development across our business, particularly in health and agriculture and consumer goods.”

“In 2022, health services revenue increased by 75 per cent, including four months of contribution from the acquisition of LifeWorks, nearing the $1 billion revenue milestone. As we progress into 2023, we continue to focus intensely on integrating and scaling our global health operations to build the healthiest communities and workplaces on the planet. This includes our healthcare programs, covering 68 million lives, inclusive of LifeWorks, an increase of more than 47 million over last year. In addition, digital health transactions were up five per cent year-over-year, to 580 million. Finally, we welcomed 1.7 million new virtual healthcare members in the last 12 months, increasing our membership to 4.5 million, up 61 per cent over the prior year. We anticipate strong growth within TELUS Health in 2023, including solid organic growth, as we continue to integrate and grow this business into an asset of enhanced global consequence. This will be supported by our intense focus on crystallizing meaningful synergies of $200 million or more that we expect to drive over the next three to five years, inclusive of revenue synergies from cross-selling, and $60 million in nearer-term cost synergies.”

“At TELUS Agriculture & Consumer Goods, annual revenues of $354 million were up 24 per cent in 2022 over the prior year, through a combination of acquisitions and organic growth, as our team continues to integrate and grow this compelling global business. This demonstrates the significant value we are creating as a globally-leading provider of agriculture and consumer goods technology solutions around the world, as we advance the sector’s efficiency and effectiveness, including food quality production, safety and waste reduction, through data analytics. We look forward to strong progress and double-digit revenue growth in this business in the year ahead, which we are confident will further illustrate the value we are creating in this important area.”

“Throughout 2022, the superiority of our world-leading wireless and wireline networks were reinforced by TELUS earning numerous accolades from independent third-party organizations,” Darren added. “Notably, global analytics company, Opensignal, recognized TELUS with five industry awards in the year for both our 4G and 5G networks, making TELUS Canada’s most awarded network by Opensignal for the 11th consecutive time. Similarly, TELUS was honoured with three awards from U.S.-based Ookla in 2022, including being named North America’s Fastest Mobile Network according to results from Speedtest by Ookla. Moreover, Canada-based Tutela recognized our wireless network with four national awards for Excellent Consistent Quality, Core Consistent Quality, 5G Excellent Consistent Quality and 5G Core Consistent Quality. Likewise, our wireline network also received praise, ranking as the fastest nationwide internet service provider (ISP) in Canada among major ISPs by PCMag for the third consecutive year. These acknowledgements clearly illustrate TELUS’ leadership in offering customers the fastest, most expansive and reliable service in Canada, across both our wireless and PureFibre networks. Moreover, this recognition of TELUS’ national broadband network leadership underscores the tremendous value of our generational investments in world-leading network technologies, including our now concluded accelerated broadband expansion program undertaken over the past two years, which will continue to drive extensive socio-economic benefits to Canadians in communities from coast-to-coast, for decades to come.”

Darren further noted, “The TELUS team’s ability to consistently drive profitable growth over the long-term, on the back of our differentiated asset base, best-in-class customer experience, world-leading networks and our unique growth businesses, provides us with confidence in the robust outlook for our business and delivering on the annual targets for 2023 that we have announced today. This includes anticipated industry-leading Operating Revenues and Adjusted EBITDA increases of 11 to 14 per cent and 9.5 to 11 per cent, respectively; capital investments of approximately $2.6 billion as previously announced; alongside Free Cash Flow of approximately $2.0 billion up nearly 60 per cent over 2022, supported by strong EBITDA growth and a material capital step-down following the successful completion of our accelerated broadband investment program. These industry-leading targets will be supported by the healthy guidance for 2023 announced this morning by TI, once again targeting double-digit Revenue and Adjusted EBITDA growth alongside leading margins as they continue to drive solid and profitable operating momentum through their end-to-end design, build and deliver capabilities, tapping into the accelerated need for premium digital customer experiences, digital transformation, content moderation and AI data solutions across its strategic industry verticals on a global basis. Furthermore, the unparalleled skill, innovation, grit and execution excellence of our team, on our consistent and winning strategy, underpins our leading multi-year dividend growth program, now in its thirteenth year, and extended last year through to the end of 2025. Since 2004, TELUS has returned $23 billion to shareholders, including $18 billion in dividends and more than $5 billion in share purchases, representing approximately $16 per share.”

“Our TELUS team continues to exemplify our social purpose in action,” concluded Darren. “In 2022 alone, our team members and retirees donated $125 million and volunteered 1.44 million hours in support of charitable and community organizations – more than any other company in Canada. Indeed, since 2000, we have demonstrated our global leadership in social capitalism by gifting $1.5 billion, including two million days of global volunteerism. I continue to be inspired by the unparalleled compassion of our TELUS family and their dedication to making the future friendly for all citizens.”

Doug French, Executive Vice-president and CFO said, “In the fourth quarter, our team delivered strong operational and financial results, demonstrating our ongoing cadence of execution excellence. Indeed, in 2022, we achieved our financial targets, including Operating Revenues and Adjusted EBITDA growth, supported by our record customer growth on our leading mobile and fixed broadband networks, diversified and powerful asset mix, and our company-wide focus on delivering exceptional customer service. For the year, cash flow from operations increased by nearly 10 per cent, and free cash flow increased by 64 per cent to nearly $1.3 billion, surpassing our original target for 2022.”

Doug added “We achieved a number of important milestones during the year including surpassing one million customer net additions within our Mobility and Fixed portfolio, and enhanced our growth profile through key acquisitions. We also completed our accelerated broadband build, ending 2022 with approximately three million premises connected to our leading PureFibre network and now cover over 80 per cent of Canadians with our next generation 5G network. With our copper-to-fibre migration largely complete, ongoing copper decommissioning will lend significant support to our enhanced efficiency and margin expansion initiatives. In addition, in 2023, we have earmarked $75 million to support the development and monetization of excess real estate assets as a result of our early successes of our copper decommissioning program. Our team also advanced our leadership position in sustainability, issuing our second and third sustainability-linked bonds during the year, linking our financing to the achievement of ambitious environmental targets and placing TELUS at the forefront of sustainable financing.”

“Our continued strong operational and financial performance supports our robust balance sheet and liquidity position” added Doug. “Against the backdrop of macroeconomic uncertainty, we have a strong debt maturity schedule with the average maturity of our long-term debt at over 12 years and only $500 million coming due in 2023. Importantly, the average cost of our long-term debt remains low at 4.03 per cent while 86 per cent of our debt is fixed. Our balance sheet strength will be further enhanced in 2023 with a meaningful increase in free cash flow with strong EBITDA growth, and as our capital expenditures take a meaningful step down, establishing a lower capital profile going forward. As a percentage of revenue, our consolidated capital intensity in 2023 will be in the zone of 13 per cent, a historical low for our company. This strong position further supports our leading dividend growth program now in place through 2025, along with de-levering our balance sheet while continuing to make strategic investments, including our participation in the 3800MHz spectrum auction later this year, to continue advancing our winning growth strategy.”

“For 2023, we set ambitious financial targets, building off our leading growth profile and well established operating momentum. Our financial outlook reflects continued healthy growth within our core business, including profitable customer growth driven by continued demand for our superior bundled offerings over our leading broadband networks. In 2023, we anticipate strong contributions from our unique and high growth businesses, including TELUS International, which today released its financial targets for 2023, including double digit profitable revenue growth, as well as TELUS Health and TELUS Agriculture & Consumer Goods, which are rapidly becoming important contributors to revenue, profitability and cash flow generation. We look forward to sharing increased disclosure for these growth businesses, which we believe will further demonstrate the significant value creation and growth potential of this business.” Doug concluded.

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